Stage Two of EMU

The establishment of the European Monetary Institute (EMI) on 1 January 1994 marked the start of the second stage of EMU and with this the Committee of Governors ceased to exist.
The two main tasks of the EMI:

• to strengthen central bank cooperation and monetary policy co-ordination, and
• to make the preparations required for the establishment of the European System of Central Banks (ESCB), for the conduct of the single monetary policy and for the creation of a single currency in the third stage.

In December 1995 the European Council agreed to name the European currency unit to be introduced at the start of Stage Three, the “euro”, and confirmed that Stage Three of EMU would start on 1 January 1999.

In December 1996 the EMI presented to the European Council, and subsequently to the public, the selected design series for the euro banknotes to be put into circulation on 1 January 2002.

On 2 May 1998 the Council of the European Union – in the composition of Heads of State or Government – unanimously decided that 11 Member States had fulfilled the conditions necessary for the participation in the third stage of EMU and the adoption of the single currency. The initial participants were Belgium, Germany, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal and Finland. The Heads of State or Government also reached a political understanding on the persons to be recommended for appointment as members of the Executive Board of the European Central Bank (ECB).

On 25 May 1998 the governments of the 11 participating Member States appointed the President, the Vice-President and the four other members of the Executive Board of the ECB. Their appointment took effect from 1 June 1998 and marked the establishment of the ECB. The ECB and the national central banks of the participating Member States constitute the Eurosystem, which formulates and defines the single monetary policy.
With the establishment of the ECB the EMI had completed its tasks.

Stage Three of EMU

On 1 January 1999 the third and final stage of EMU commenced with the irrevocable fixing of the exchange rates of the currencies of the 11 Member States initially participating in Monetary Union and with the conduct of a single monetary policy under the responsibility of the ECB.

The number of participating Member States increased to 12 on 1 January 2001, when Greece entered the third stage of EMU. Since that day the Bank of Greece has been part of the Eurosystem.